Lately, this blog has strayed from economics because economics is not simply about money; it is about people.

Economics is the study of free markets (or, to use Marx’s derogatory term, “Capitalism”). Economics does not explain communism or socialism or centralized control because that would be the study of power-hungry princes — in other words, politics. The study of free markets boils down to the description of rational behavior in free individuals.

Adam Smith, widely considered the father of economics, wrote The Theory of Moral Sentiments (1759). In it, he wrote: “When we consider the character of any individual, we naturally view it under two different aspects; first, as it may affect his own happiness; and secondly, as it may affect that of other people.”

This seems reasonable to those with Judeo-Christian values. This section outlines the virtue of “do unto others...”

The cornerstone of Smith’s work was individuality, a uniqueness you might describe as “personality” or “soul.” His concern was with virtue and morality, as he was a moral philosopher at the University of Glasgow. Today, we consider Smith a founding economist, but he did not consider himself an “economist,” even though his work helped to define the field.

Smith explained why moral behavior was superior to immoral behavior. His frame of reference was Christianity. So, he explained, as scientifically as he could, Judeo-Christian virtue. Smith described the “soul” in action through humanity.

Paraphrased, free markets are based upon the belief that individuals have a unique perspective in life and can use that to provide value to others. Your unique personhood — your soul — is the basis of your value to yourself and to others.

For humanity in general, gross domestic product is a function of population. The more people, the more a society can produce. Like an ant colony, more ants under the control of a single queen are superior to fewer ants. This is the logical basis of human collectivism: a detachment from individuality.

Free societies, on the other hand, value the individual. Production is a function of freedom. Freedom is sustained by virtue. Virtue is acquired through faith and wisdom. Faith and wisdom require freedom. This is known as the golden triangle of freedom. It’s puritanical, but the notion was revolutionary in the late 1700s. This explains why America’s founding fathers embraced the concept.

Over the past 300 years, production from the world’s free people has far exceeded production from the collectivists. Innovation is a product of freedom, the wisdom of virtues, and the faith to persevere. Without freedom, no amount of determination, ability, or faith can be focused upon that which the individual is exactly suited to pursue.

In a collectivist society, humans are guided by a collective will, regarding which no individual has complete perspective, knowledge, ability, or accountability. The collective is detached from individual humanity. The focus of effort degenerates into what empowers those “in power” instead of what is productive.

Instances where innovation for the collective also benefits the whole of humanity exist. But such instances are rare. Innovation without individual freedom is slowed, distorted, and misallocated.

A powerful colony of human “ants” may steal innovation and riches by conquest. Collectivist empires may spread stolen innovation through their kingdom, but they also destroy innovation, which they do not value. It would be astonishing to find an aggregate human benefit from all the inventions by all the worlds’ collectivist governments. Yet a single free nation led humanity from horses and plows to landing upon the moon.

The collective misallocation of resources is a key reason that periods of human enlightenment coincide with flashes of increased freedom and then end when virtue fails. The struggle to maintain a free society is actually an interpersonal struggle within the members of the society. It is a struggle between the virtues of freedom and the comforts of entitlement.